I have to be honest and say that I have often wondered why European IT services firms (as distinct from software firms) want to chance it in North America – other than to ‘follow the client’ – as such ‘missions impractical’ often end up in tears. But it looks like Capgemini may be the exception that proves the rule, given that North America (NA) is now its largest market, overtaking both the UK and France.
Whereas Q3 revenues (to 30th Sept.) at Capgemini UK grew by 1.4% yoy at constant exchange rates (CER), to €534m, NA revenues soared by 11% CER to €543m, relegating France to third spot at €497m, 4% down. At group level, total revenues rose by 1% CER to €2.52bn. Capgemini CEO Paul Hermelin referred to a ‘geographical rebalance towards North America’ through which he expects to see the region comprise at least 25% of Capgemini’s revenues by 2015, up from 20% today. And with an 8.7% operating margin, NA was Capgemini’s most profitable region in H1 (European SIs do not disclose profitability on the ‘odd’ quarters), so this rebalancing is actually helping the bottom line.
There’s another ‘rebalancing’ going on at Capgemini too – that of its workforce. Today almost 40% of Capgemini’s 123k-strong workforce is ‘offshore’ – over 40k in India alone. This is expected to rise to 50% by 2015.
Hermelin is holding to his FY objective of like-for-like growth >1% coupled with an increase in margin.
We will be comparing the performance of Capgemini and its European peers Atos and Steria– and hopefully ‘CGI Europe’ (previously known as Logica) – soon.